ictoria Hospital uses a job cost system for all patients who have surgery. In March, the pre- operating room (PRE-OP) and operating room (OR) had budgeted allocation bases of 4 000 nursing hours and 2 000 nursing hours respectively. The budgeted nursing overhead charges for EACH department for the month were $168 000 and $132 000 respectively. The hospital floor for patients who had undergone surgery, had budgeted overhead costs of $1 200 000 and 15 000 nursing hours for the month. For patient Fred Adams, actual hours incurred were eight in the pre-operating room and four in the operating room. He was in the hospital for 4 days (96 hours). Other costs related to Adams were: PRE-OP Costs OR Costs In-room Costs Patient medicine $ 200 $ 500 $2 400 Direct nursing time $1 000 $2 000 $3 000 The hospital uses a budgeted overhead rate for applying overheads to patient stays. Required: i. Identify THREE industries suited to using service costing in cost ascertainment. ii. Identify the applicable overhead rate for each of the three service areas.
ictoria Hospital uses a
operating room (PRE-OP) and operating room (OR) had budgeted allocation bases of 4 000
nursing hours and 2 000 nursing hours respectively. The budgeted nursing overhead charges for
EACH department for the month were $168 000 and $132 000 respectively. The hospital floor
for patients who had undergone surgery, had budgeted overhead costs of $1 200 000 and 15 000
nursing hours for the month. For patient Fred Adams, actual hours incurred were eight in the
pre-operating room and four in the operating room. He was in the hospital for 4 days (96 hours).
Other costs related to Adams were:
PRE-OP Costs OR Costs In-room Costs
Patient medicine $ 200 $ 500 $2 400
Direct nursing time $1 000 $2 000 $3 000
The hospital uses a budgeted overhead rate for applying
Required:
i. Identify THREE industries suited to using service costing in cost ascertainment.
ii. Identify the applicable overhead rate for each of the three service areas.
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